The U.S. Small Business Administration will prohibit legal permanent residents from owning any interest in a business that is seeking SBA-backed funding as of March 1, 2026, according to revised rules for some of the largest loan programs.
The SBA released a policy notice on February 2, stating that it will be modifying its lender guidance for some of its loan programs. The SBA states that it will be requiring that 100% of all direct and indirect owners of a small business applicant be U.S. citizens or U.S. nationals whose principal residence is located within the United States or within U.S. territories. The SBA stated this change aligns with federal regulations and Presidential Executive Order 14159.
The change has already been met with opposition from various business organizations that support small businesses. The Associated Press reported that the Small Business Majority called that it was “a decision that will limit the growth of small businesses and jobs throughout the United States.”
The change has been outlined in the SBA Policy Notice 5000-876441. The change updates the Standard Operating Procedure 50 10 8 for SBA lender loan programs and development company loan programs. The change affects the 7(a) loan program and the CDC/504 loan program.
The change also revokes the existing procedural notice that has allowed up to 5% ownership for foreign nationals or U.S. citizens, U.S. nationals, and lawful permanent residents not located within the United States. The change states that as of March 1, legal permanent residents will not be eligible to own any percentage interest as an applicant/borrower or as an owner.
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